An Overview

At BitCap, we strive to put mining in the hands of everybody. We believe in decentralized, trustless technologies and want to make it as easy as possible for anyone to get involved in the world behind Bitcoin. Bitcoin, while the most popular, itself is just one manifestation of the real innovation: the Blockchain.

Step 1: define the blockchain

The Blockchain is Bitcoin's public ledger, the file that keeps track of where every Bitcoin was generated and sent to so that the world can look up where every Bitcoin is. Currency is the first logical application, but this technology applies to other ends as well, and, just like the internet in the 90s, we're slowly discovering new ways to apply it. Humanity has created a way for mathematical algorithms to replace institutions of today inexpensively and without authoritative control.

Step 2: Define cryptocurrencies

In the simplest of forms, Cryptocurrency is digital currency or a medium of exchange similar to traditional fiat currencies such as USD but designed for the purpose of securely exchanging digital information through a process made possible by the principles of cryptography. Cryptography is used to secure the originating transactions as well as controlling the creation of new coins. Today, there are hundreds of other cryptocurrencies known as Altcoins.

"Put another way; cryptocurrency is electricity converted into lines of code with monetary value."

Step 3: define mining

In traditional fiat money systems, the controlling governments simply print money when needed. With cryptocurrencies, similar to the era when gold or silver backed traditional currencies, money isn't printed – it is discovered. Think mining for gold. Today, computers around the world ‘mine' for coins competing by working through blocks of calculations to discover them.

People are sending cryptocurrencies to each other over the blockchain network all the time, but unless someone keeps a record of all these transactions, no-one would be able to keep track of who had paid what, when, where and to whom. The blockchain network deals with this by collecting all of the transactions made during a set period into a list, called a "block." It's the miners' job to verify and confirm those transactions and write them into a general ledger viewable to the world.